Counter-trend rebound likely reached a stop; stay in short positions. The FKLI performed softly in the latest session, ending 13.5 pts lower at 1,323.5 pts. Intraday tone was negative, as the index generally moved lower for most parts of the session, with the high and low posted at 1,328 pts and 1,310.5 pts. We still believe the counter-trend rebound that started from the low of 1,171 pts on 17 Mar has likely reached its top with the failed attempt to cross above the 1,350 pts recently. This means the risk for the index to resume its multi-month downtrend is high. Both the 50-day and 200-day SMA lines, which are curving downward, are also supportive of our negative trading bias.

As the downtrend has likely resumed, we retain our recommendation for traders to stay in short positions. We initiated these at 1,309.5 pts, the closing level of 1 Apr. For risk management purposes, a stop-loss can be placed above the 1,330-pt mark.

The immediate support is maintained at 1,313 pts – the price point of 2 Mar. This is followed by 1,290.5 pts – the low of 25 Mar. Meanwhile, the immediate resistance is set at 1,330 pts, near 2 Mar’s high, followed by 1,350-pts.

Source: RHB Securities Research - 6 Apr 2020